What is a Supplemental Needs Trust?

Individuals with disabilities require substantial resources to care for not only their medical needs, but their personal needs as well. If you care for someone who is disabled, you are probably familiar with need-based government assistance programs, such as Medi-Cal and Supplemental Security Income (SSI). Eligibility for these two programs is based on income. A Supplemental Needs Trust is an estate planning tool that can be used for the benefit of the disabled, while protecting their eligibility for government benefits.

How does a Supplemental Needs Trust work?

In order to be eligible for SSI, your assets must be less than $2,000 if you are single, and $3,000 if you are married. The Medi-Cal minimum eligibility level, for a family of four, is $29,700. As you can see, to be qualified for these need-based government benefit programs, you must have very limited income. So, it is necessary to plan for the future needs of the disabled in order to protect their eligibility for these important benefits. A Supplemental Needs Trust is one type of estate planning tool that can be used for that purpose.

Although, in qualifying for government benefits, a disabled person is not allowed to have a trust, a Supplemental Needs Trust does not belong to the disabled individual. Instead, the trust is established and managed by a trustee. The trustee retains complete discretion in determining how the assets can be used. The disabled individual is merely the beneficiary of the trust, so it will not disqualify them for government benefits.

A comprehensive plan is the first step

There are three important issues that should be considered when creating a plan for the future care of the disabled. First, you must determine who will be responsible for actually providing care. Next, you must establish how the trust assets will be made available for your loved one, without disqualifying them for benefits. Finally, you need to include provisions that will ensure your loved one will be properly cared for. Obviously, it is best to make these important decisions now, while you still can. If not, you may pass away or become incapacitated before these decisions can be made, and someone else will make them for you.

Don’t forget personal needs.

Sometimes we forget the personal care and the preferences of the disabled are as important has medical care and financial support. In case the future caregiver is not familiar with those preferences, clear instructions should be included when planning for the future care of the disabled. When this is done, you can have peace of mind knowing that not only their needs, but also their desires will be met.

As with many other estate planning tools, a Supplemental Needs Trust can be complex. More importantly, they are often scrutinized by Social Security or the Department of Human Services for your state, when determining benefits or evaluating the level of care being provided for the disabled. For this reason, it is important to consult a California estate planning attorney who is experienced in this area, and very familiar with the requirements and pitfalls of drafting a Supplement Needs Trust.

A graduate of Boston University School of Law, Scott P. Schomer is a frequent lecturer on estate planning and elder law issues, having discussed these important issues on local and national television. A seasoned courtroom advocate, Scott has obtained combined judgments and verdicts in excess of twenty-five million dollars for his clients. Scott has served as a member of the Los Angeles Superior Court Probate Volunteer Panel (PVP Attorney), Probate Settlement Panel and a Judge Pro Tempore. Scott's expertise has been recognized by his peers with such accolades as a life-time membership in the Multi-Million Dollar Advocates Forum, the Five Star Wealth Manager designation, and repeated nominations as California Super Lawyer.

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